The changes are effective for new loans submitted from Tuesday, 18 February.

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For owner-occupied P&I loans of up to $500,000, the changes are as follows:

a reduction of 8 bps to 3.10 per cent (3.26 per cent comparison rate) for borrowers with an LVR of less than 60 per cent; and

a reduction of 8 bps to 3.15 per cent (3.31 per cent comparison rate) for borrowers with an LVR of between 60-80 per cent.

For owner-occupied P&I loans of between $500,000 to $750,000, the changes are as follows:

a reduction of 8 bps to 3.05 per cent (3.21 per cent comparison rate) for borrowers with an LVR of less than 60 per cent; and

a reduction of 6 bps to 3.12 per cent (3.28 per cent comparison rate) for borrowers with an LVR of between 60-80 per cent.

For owner-occupied P&I loans over $750,000, the changes are as follows:

a reduction of 10 bps to 2.99 per cent (3.16 per cent comparison rate) for borrowers with an LVR of less than 60 per cent; and

a reduction of 5 bps to 3.09 per cent (3.25 per cent comparison rate) for borrowers with an LVR of between 60-80 per cent.

In a statement to Mortgage Business, Johnny Lockwood, general manager lending, cards and deposits, said the bank was passing on savings to customers.

"Virgin Money Australia is dedicated to remaining competitive by passing on savings where and when we can," he said.

"Virgin Money’s new lower Reward Me Home Loan rates are another example of our commitment to deliver value for our customers."

Virgin Money’s variable rate cuts have come amid growing evidence of heightened competition in the mortgage market, with the Reserve Bank of Australia (RBA) recently attributing a 40 bps gap between front and back book pricing to aggressive discounting.

Mortgage rate could be set to fall further, with analysts continuing to expect additional cuts to the cash rate in the first half of 2020.

AMP chief economist Shane Oliver is expecting the cash rate to drop to 0.25 per cent in order to help achieve the RBA’s targets of sustainable growth in the economy, full employment and 2-3 per cent annual inflation.